8-K
Techprecision Corp (TPCS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of theSecurities and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 13, 2020
TECHPRECISIONCORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 000-51378 | 51-0539828 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation or Organization) | (Commission File Number) | (IRS Employer Identification No.) |
1 Bella Drive
Westminster, MA 01473
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 874-0591
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| N/A | N/A | N/A |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On February 13, 2020, TechPrecision Corporation issued a press release announcing its financial results for the third quarter ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information in this Item 2.02 of Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit<br><br> <br>Number | Description |
|---|---|
| 99.1 | Press Release dated February 13, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TECHPRECISION CORPORATION | ||
|---|---|---|
| Date: February 13, 2020 | By: | /s/ Thomas Sammons |
| Name: | Thomas Sammons | |
| Title: | Chief Financial Officer |
Exhibit 99.1
| Company Contact: | Investor Relations Contact: |
|---|---|
| Mr. Thomas Sammons | Hayden IR |
| Chief Financial Officer | Brett Maas |
| TechPrecision Corporation | Phone: 646-536-7331 |
| Phone: 978-883-5109 | Email: [email protected] |
| Email: [email protected] | Website: www.haydenir.com |
Website: www.techprecision.com
FOR IMMEDIATE RELEASE
TechPrecision Corporation Reports ThirdQuarter Financial Results
Backlog reaches $17 million; highestlevel in over three years
Westminster, MA – February 13, 2020 – TechPrecision Corporation (OTCQB: TPCS) (“TechPrecision” or “the Company”), an industry leading manufacturer of precision, large-scale fabricated and machined metal components and tested systems with customers in the defense, energy and precision industrial sectors, today reported financial results for the third quarter and nine months ended December 31, 2019.
“Our results for the third quarter were negatively impacted by learning-curve related cost overruns that resulted in negative margins and increased loss provisions on a limited number of new projects,” stated Alexander Shen, TechPrecision’s Chief Executive Officer. “These new projects are an opportunity to demonstrate technical excellence in custom know-how of complex fabrication and complex machining, and represent a definite entry point into new business prospects. We expect improved margins going forward as these projects approach completion, costs stabilize, and additional profitable projects come on-line.”
“The Company’s sales order backlog reached its highest level in over three years increasing to $17.0 million at December 31, 2019 as approximately $15.3 million of additional orders were booked over the first nine months of fiscal 2020,” stated Mr. Shen. “We continue to replenish backlog and we believe this will provide for a steady revenue stream and profitable margins in fiscal 2021.”
In January 2020, the Company used $1.1 million from available cash and repaid in full the capital equipment obligation with Peoples Capital. This payment reduced our total debt obligations to $2.6 million at January 17, 2020 from $3.7 million at December 31, 2019, and facilitated increasing our revolving line of credit with Berkshire Bank from $1 million to $3 million.
“The debt repayment reduces our cash outflow and expense for debt principal and interest payments in future periods,” added Mr. Shen, “while providing increased borrowing capacity and financial flexibility.”
Third Quarter of Fiscal 2020 FinancialResults
| · | Net sales were $3.7 million or 14% lower when compared to $4.3 million in the same quarter a year<br>ago. |
|---|---|
| · | Cost of sales were 2% higher than the prior year, impacted by a $0.3 million charge for loss contracts. |
| --- | --- |
| · | Gross profit was $0.3 million, down from $1.0 million in the same quarter last year. |
| --- | --- |
| · | Operating loss was $348,000 compared to operating income of $339,000 in the same period a year<br>ago. |
| --- | --- |
Nine Months of Fiscal 2020 FinancialResults
| · | Net sales were $11.1 million or 8% lower when compared to $12.0 million in the same period a year<br>ago. |
|---|---|
| · | Cost of sales were 4% higher than the prior year, impacted by $0.8 million charge for loss contracts<br>this fiscal year. |
| --- | --- |
| · | Gross profit was $1.8 million, down 41% when compared to the same period last year. |
| --- | --- |
| · | Operating loss was $0.3 million compared to operating income of $1.0 million in the same period<br>a year ago. |
| --- | --- |
| · | Net loss was $0.4 for the nine months ended December 31, 2019, compared to net income of $0.6 million<br>for the nine months ended December 31, 2018. |
| --- | --- |
| · | EBITDA was $0.3 million for the nine months ended December 31, 2019, $1.3 million lower when compared<br>to the same period a year ago. |
| --- | --- |
Financial Position
At December 31, 2019, TechPrecision had $2.0 million in cash and cash equivalents. Working capital was $5.4 million compared to working capital of $6.3 million at March 31, 2019.
TeleconferenceInformation
The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on February 13, 2020. To participate in the live conference call, please dial 1-844-407-9500 five to 10 minutes prior to the scheduled conference call time. International callers should dial 1-862-298-0850. When prompted, reference TechPrecision.
A replay will be available until March 13, 2020. To access the replay, dial 1-877-481-4010 or 1-919-882-2331. When prompted, enter Conference Passcode 58362. The call will also be available over the Internet and accessible at https://www.webcaster4.com/Webcast/Page/2198/33008.
About TechPrecision Corporation
TechPrecision Corporation, through its wholly owned subsidiary, Ranor, Inc., manufactures large-scale, metal fabricated and machined precision components and equipment. These products are used in a variety of markets including: defense, aerospace, nuclear, industrial, and medical. TechPrecision’s goal is to be an end-to-end service provider to its customers by furnishing customized solutions for completed products requiring custom fabrication and machining, assembly, inspection and testing. To learn more about the Company, please visit the corporate website at http://www.techprecision.com. Information on the Company’s website or any other website does not constitute a part of this press release.
Safe Harbor Statement
This release contains certain “forward-lookingstatements” relating to the business of the Company and its subsidiary companies. All statements other than statements ofcurrent or historical fact contained in this press release, including statements that express our intentions, plans, objectives,beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future eventsor conditions are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “should,” “would” and similar expressions,as they relate to us, are intended to identify forward-looking statements. These statements are based on current expectations,estimates and projections made by management about our business, our industry and other conditions affecting our financial condition,results of operations or business prospects. These statements are not guarantees of future performance and involve risks, uncertaintiesand assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressedor forecasted in, or implied by, the forward-looking statements due to numerous risks and uncertainties. Factors that could causesuch outcomes and results to differ include, but are not limited to, risks and uncertainties arising from: our reliance on individualpurchase orders, rather than long-term contracts, to generate revenue; our ability to balance the composition of our revenues andeffectively control operating expenses; the availability of appropriate financing facilities impacting our operations, financialcondition and/or liquidity; our ability to receive contract awards through competitive bidding processes; our ability to maintainstandards to enable us to manufacture products to exacting specifications; our ability to enter new markets for our services; ourreliance on a small number of customers for a significant percentage of our business; competitive pressures in the markets we serve;changes in the availability or cost of raw materials and energy for our production facilities; operating in a single geographiclocation; restrictions in our ability to operate our business due to our outstanding indebtedness; government regulations and requirements;pricing and business development difficulties; changes in government spending on national defense; our ability to make acquisitionsand successfully integrate those acquisitions with our business; general industry and market conditions and growth rates; generaleconomic conditions; and other risks discussed in the Company’s periodic reports that are filed with the Securities and ExchangeCommission and available on its website (www.sec.gov). Any forward-looking statements speak only as of the date on which they aremade, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstancesthat may arise after the date of this press release, except as required by applicable law. Investors should evaluate any statementsmade by us in light of these important factors.
-- Tables Follow --
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| March 31,<br> 2019 | |||
|---|---|---|---|
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | 1,968,405 | $ | 2,036,646 |
| Accounts receivable | 752,984 | 1,010,443 | |
| Contract assets | 3,800,928 | 4,390,832 | |
| Inventories | 1,512,082 | 1,240,315 | |
| Other current assets | 794,387 | 498,059 | |
| Total current assets | 8,828,786 | 9,176,295 | |
| Property, plant and equipment, net | 4,347,796 | 4,860,609 | |
| Deferred income taxes | 2,119,439 | 2,004,346 | |
| Other noncurrent assets, net | 43,913 | 6,233 | |
| Total assets | 15,339,934 | $ | 16,047,483 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | |||
| Current liabilities: | |||
| Accounts payable | 470,619 | $ | 609,082 |
| Accrued expenses | 981,255 | 753,499 | |
| Contract liabilities | 828,762 | 740,947 | |
| Current portion of long-term debt | 1,167,518 | 822,105 | |
| Total current liabilities | 3,448,154 | 2,925,633 | |
| Long-term debt | 2,481,948 | 3,410,542 | |
| Stockholders’ Equity: | |||
| Common stock - par value .0001 per share, 90,000,000 shares authorized, 29,254,594 and 29,234,594 shares issued and outstanding, at December 31, 2019 and March 31, 2019 | 2,925 | 2,923 | |
| Additional paid in capital | 8,781,971 | 8,693,106 | |
| Accumulated other comprehensive income | 21,611 | 21,940 | |
| Retained earnings | 603,325 | 993,339 | |
| Total stockholders’ equity | 9,409,832 | 9,711,308 | |
| Total liabilities and stockholders’ equity | 15,339,934 | $ | 16,047,483 |
All values are in US Dollars.
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(unaudited)
| Three Months Ended <br>December 31, | Nine Months Ended <br>December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net sales | $ | 3,667,276 | $ | 4,270,396 | $ | 11,075,620 | $ | 11,990,404 | ||||
| Cost of sales | 3,352,962 | 3,299,166 | 9,238,287 | 8,871,550 | ||||||||
| Gross profit | 314,314 | 971,230 | 1,837,333 | 3,118,854 | ||||||||
| Selling, general and administrative | 662,675 | 631,783 | 2,145,055 | 2,113,285 | ||||||||
| (Loss) income from operations | (348,361 | ) | 339,447 | (307,722 | ) | 1,005,569 | ||||||
| Other income | 185 | 1,590 | 21,063 | 8,605 | ||||||||
| Interest expense | (69,328 | ) | (88,314 | ) | (218,447 | ) | (273,948 | ) | ||||
| Total other expense, net | (69,143 | ) | (86,724 | ) | (197,384 | ) | (265,343 | ) | ||||
| (Loss) income before income taxes | (417,504 | ) | 252,723 | (505,106 | ) | 740,226 | ||||||
| Income tax (benefit) expense | (97,734 | ) | 34,701 | (115,092 | ) | 177,104 | ||||||
| Net (loss) income | $ | (319,770 | ) | $ | 218,022 | $ | (390,014 | ) | $ | 563,122 | ||
| Other comprehensive (loss) income, before tax: | ||||||||||||
| Foreign currency translation adjustments | $ | 9 | $ | 18 | $ | (329 | ) | $ | (2,402 | ) | ||
| Other comprehensive (loss) income, net of tax | $ | 9 | $ | 18 | $ | (329 | ) | $ | (2,402 | ) | ||
| Comprehensive (loss) income | $ | (319,761 | ) | $ | 218,040 | $ | (390,343 | ) | $ | 560,720 | ||
| Net (loss) income per share basic | $ | (0.01 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | ||
| Net (loss) income per share diluted | $ | (0.01 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | ||
| Weighted average number of shares outstanding: Basic | 29,254,594 | 28,858,560 | 29,254,230 | 28,835,957 | ||||||||
| Weighted average number of shares outstanding: Diluted | 29,254,594 | 30,427,218 | 29,254,230 | 30,158,509 |
TECHPRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Nine Months Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net (loss) income | $ | (390,014 | ) | $ | 563,122 | |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||
| Depreciation | 548,038 | 558,571 | ||||
| Amortization of debt issue costs | 31,280 | 43,638 | ||||
| Stock based compensation expense | 81,667 | 106,727 | ||||
| Change in contract loss provision | 216,039 | 24,541 | ||||
| Deferred income taxes | (115,092 | ) | 177,104 | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | 257,459 | 1,299,194 | ||||
| Inventories | (271,767 | ) | (1,004,145 | ) | ||
| Contract assets | 589,904 | (5,912,297 | ) | |||
| Other current assets | (296,328 | ) | (14,174 | ) | ||
| Other noncurrent assets | (9,419 | ) | (7,245 | ) | ||
| Accounts payable | (138,463 | ) | 279,893 | |||
| Accrued expenses | 18,282 | 202,860 | ||||
| Contract liabilities | 87,815 | 3,803,087 | ||||
| Net cash provided by operating activities | 609,401 | 120,876 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Purchases of property, plant and equipment | (35,225 | ) | (402,880 | ) | ||
| Net cash used in investing activities | (35,225 | ) | (402,880 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Deferred loan costs | (32,209 | ) | -- | |||
| Repayment of long-term debt | (610,515 | ) | (569,809 | ) | ||
| Net cash used in financing activities | (642,724 | ) | (569,809 | ) | ||
| Effect of exchange rate on cash and cash equivalents | 307 | 628 | ||||
| Net decrease in cash and cash equivalents | (68,241 | ) | (851,185 | ) | ||
| Cash and cash equivalents, beginning of period | 2,036,646 | 2,689,110 | ||||
| Cash and cash equivalents, end of period | $ | 1,968,405 | $ | 1,837,925 |
TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of EBITDA to Net Income
The following table provides a reconciliation of EBITDA to net (loss) income, the most directly comparable U.S. GAAP measure reported in our condensed consolidated financial statements:
| (dollars in thousands) | Nine months<br> December 31, 2019 | Nine months<br> December 31, 2018 | Change<br> Amount | |||||
|---|---|---|---|---|---|---|---|---|
| Net (loss) income | $ | (390 | ) | $ | 563 | $ | (953 | ) |
| Income tax (benefit) expense | (115 | ) | 177 | (292 | ) | |||
| Interest expense (1) | 218 | 274 | (56 | ) | ||||
| Depreciation | 548 | 559 | (11 | ) | ||||
| EBITDA | $ | 261 | $ | 1,573 | $ | (1,312 | ) | |
| (1) | Includes amortization of debt issue costs. | |||||||
| --- | --- |